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  3. American Economic Journal: Microeconomics
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  5. Bargaining in the Shadow of Uncertainty

American Economic Journal:
Microeconomics

ISSN 1945-7669 (Print) | ISSN 1945-7685 (Online)

Bargaining in the Shadow of Uncertainty

  • Marina Agranov
  • Hülya Eraslan
  • Chloe Tergiman
American Economic Journal: Microeconomics (Forthcoming)

Abstract

In bargaining environments with stochastic future surplus, failing to delay agreement can be inefficient when the expected future surplus is sufficiently high. Theoretically, such inefficiencies never arise under unanimity rule but can under majority rule. Using a laboratory experiment, we find support for these predictions, both when the unanimity rule is predicted to be more efficient and when there should be no difference between the two rules. We also find large point prediction deviations under the majority rule. We show these deviations can be explained by higher-thanpredicted egalitarian sharing and a lower risk of being excluded from future agreements.

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